Amber Inn & Suites, Inc. (Amber Inn) is a hotel chain established in 1979 and is located within 10 Western and Rocky Mountain states in the U.S. Amber Inn consists of 250 hotel chain properties with an average of 120 individual guest rooms or suite units with locations on major highways close to suburban industrial and office complexes, airports, and large regional shopping centers (Kerin & Peterson, 2009).
Amber Inn has been struggling with a net operating loss since 2002 with Fiscal Year (FY) 2005 being projected to be its fifth consecutive unprofitable year with a projected lodging revenue of $422.6 million and a net loss of $15.7 million (Kerin & Peterson, 2009). The company’s new president and CEO, Joseph James wanted an hour presentation that describes initiatives, expenditures, and outcomes for the past two fiscal years for FY 2006. He would like the company to achieve profitability within two years. Additionally, he would like to implore the use of growth in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) as a corporate performance measure and as a criteria for incentive compensation for senior management. After several years of sustained loss, he would the company to find a strategy that will lead to growth and overall profitability.
The major problem that Amber Inn is facing is to decide whether or not to expand their marking and advertising costs to include a larger and wider customer base. Currently, Amber Inn caters and markets their properties to business travelers that stay on an average of one to two nights (Kerin & Peterson, 2009). In addition to expanding their customer base, they will have to determine what services and additional amenities they will need to over to in order to increase their customer base. Moreover, Amber Inn needs to develop successful strategies to increase overall profitability. As previously noted, Amber Inn has been struggling with a net operating...